IRS to begin taxing businesses for payment app transactions

NASHVILLE, TN (WSMV) – Many of us use Venmo, Paypal, or Cashapp, but the IRS is now cracking down on these payment apps.

Until now, the IRS usually only issued 1099 for a business with at least 200 business transactions and at least $20,000 in gross payments. However, that’s all changing on Jan 1.

Starting Jan 1, 2022, apps will begin reporting gross business payments of more than $600 to the IRS. It’s part of the “American Rescue Plan,” which was signed into law early this year, cracking down on unreported, taxable income.

“People are probably reading this and saying, ‘oh my goodness, I sent Venmo to my roommate. We pay for dinner. Is this going to affect me as an individual?’ No, it should not because this is only going to be for a business,” Music City CPA Will Haeberle said. “The big picture is they want to close a loophole for businesses that are not reporting their gross sales.”

If you’re a business already doing the right thing and tracking your income and expenses, this shouldn’t impact you. Just make sure you continue to keep track and double-check your numbers.

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